Home » Open Orphan (ORPH) » #ORPH Open Orphan – Profitable outlook for 2022

#ORPH Open Orphan – Profitable outlook for 2022

In just over two years Open Orphan (Open), a rapidly growing specialist contract research organisation (CRO), has built a high-growth London-based clinical trial business (hVIVO) supported by a European clinical services subsidiary (Venn). High demand for hVIVO’s challenge studies in respiratory infections, caused by pharmaceutical investment in new projects, moved the group into profit in the second quarter of 2021 (Q2FY21) and we expect increased margins in 2022. As an indication of this growth and leading position, two new contracts, one for about £10mln and one for £5mln, were announced in December 2021 after £21mln of new business already signed in H221.

Open Orphan is now a leader in human respiratory disease challenge clinical studies. Challenge studies use carefully-screened, disease-free volunteers and deliberately infect them with a pathogen under tightly controlled conditions to test new pharmaceuticals and vaccines. Such studies offer a rapid initial assessment of the efficacy of a candidate therapy and quickly provide a wealth of scientific data. They are followed by larger studies. Challenge studies are now becoming an accepted fast track in drug development. Open can run nine different challenge protocols. A new malarial challenge study protocol is being clinically validated and will be commercially available later in 2022.

Open has 43 Category 2 quarantine beds in East London, 19 of which are in a leased Whitechapel former hotel facility and 24 on the QMB east London site. These are suitable for diseases such as flu. For the 2021 COVID-19 challenge study, which needed a higher level of bio-security, 19 higher specification Category 3 beds were used at the Royal Free Hospital.

We anticipate a rapid rise in sales from £23mln in FY20 to our FY21 estimate of £37mln. This is due to hVIVO growth underpinned by steadier revenues from Venn. In our FY22 forecast, guided by management, Open could generate £50mln or more of revenues with underlying earnings (EBITDA) of around £7.5mln.

Importantly, 75% of the reported H1FY21 revenue was not SARS-Cov-2 related; we expect this to increase into 2022. More typical projects are like the contract with Pneumagen to test respiratory pathogens like Respiratory Syncytial Virus (RSV). Most clients are not disclosed but include Pfizer.

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